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Is Micron Technology Inc. a Buy?

Micron shares have performed well this year, but can the momentum continue?

Micron Technology(NASDAQ:MU), which supplies flash memory to Apple(NASDAQ:AAPL), is on a strong run this year. The stock has gained almost 35% and is trading close to its 52-week high. A strong recovery in memory-chip prices and solid demand for its products were tailwinds for Micron this year. As a result of consolidation in the flash memory industry and the acquisition of Elpida, the company's performance has improved.

Even at its 52-week high, Micron still looks like a good investment, as chip prices are expected to remain strong. Moreover, the upcoming ramp of the next-generation iPhones can drive Micron to new highs. Let's take a closer look at Micron's prospects and see why the company looks like a good bet despite its already strong run in 2014.

Why Micron should get betterMicron's solid operational execution, along with favorable industry and market conditions should lead to better performance going forward. In the dynamic random-access memory, or DRAM, segment, Micron expects wafer production to remain soft due to DRAM-to-NAND conversion. Moreover, the chipmaker expects shrinkage in total industry bit-supply growth in 2014.

Even beyond 2014, Micron expects industry supply growth in the 20%-30% range, driven by relatively stable wafer output and a slowdown in process technology migration. Since the five-year DRAM demand forecast is expected to be in the 25%-30% range, the supply and-demand situation continues to remain favorable for Micron.

DRAM is expected to deliver strong results, with stable revenue and gross-margin expansion later in the year. The chipmaker is also trying to provide its server customers with unique solutions to help differentiate its products. Micron is working with major networking customers to improve bandwidth performance and benefit from trends such as the cloud, data centers, and the LTE rollout. In addition, the company's involvement in hybrid-memory-computing enablement and DDR enablement are additional growth drivers.

Micron's cutting-edge NAND process technology is also expected to deliver strong growth. The company is ramping yields of its 20-nanometer and industry-leading 16-nanometer technologies. These smaller form-factors should result in increased demand for its products as they are more efficient in nature, consuming less power and delivering better performance.

The company's graphics business is also gaining momentum, as it shipped more than 100 million gigabits in the previous quarter. Also, Micron's GDDR5 product was qualified by an important customer with the company recording positive yield improvement on its 25-nanometer process.

iPhone 6 is an opportunityThe biggest growth opportunity for Micron comes from Apple. After acquiring Elpida, Micron landed the Apple account and supplied memory for the iPhone. Apple is now getting ready to launch the iPhone 6, which might arrive in September, and is expected to carry cutting-edge technology such as a LiquidMetal chassis and sapphire display. Also, the iPhones are going to be bigger this time, according to rumors, as Apple is trying to capture the market for large-screened devices.

As a result, Apple is expecting huge demand for the device, and it could ship as many as 80 million units of the iPhone 6 this year. As Apple increases production of the iPhones, Micron will gradually see an upswing in its business going forward and report greater revenue growth.

The bottom lineOne of the most impressive things about Micron is that the company is still very cheap despite its share-price appreciation this year. Micron has a trailing P/E ratio of 11 and a forward P/E ratio of 9. This is very cheap, especially considering that Micron's bottom line is expected to grow at a compound annual growth rate, or CAGR, of 13% for the next five years. The historical five-year average growth rate is just 2.7%. Even though Micron trades near its 52-week range, it is still a good buy.